Correlation Between Aerojet Rocketdyne and Aerovironment

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne and Aerovironment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aerojet Rocketdyne and Aerovironment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Aerovironment, you can compare the effects of market volatilities on Aerojet Rocketdyne and Aerovironment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aerojet Rocketdyne with a short position of Aerovironment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Aerovironment.

Diversification Opportunities for Aerojet Rocketdyne and Aerovironment

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Aerojet and Aerovironment is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Aerovironment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovironment and Aerojet Rocketdyne is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aerojet Rocketdyne Holdings are associated (or correlated) with Aerovironment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovironment has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Aerovironment go up and down completely randomly.

Pair Corralation between Aerojet Rocketdyne and Aerovironment

Given the investment horizon of 90 days Aerojet Rocketdyne Holdings is expected to generate 0.57 times more return on investment than Aerovironment. However, Aerojet Rocketdyne Holdings is 1.77 times less risky than Aerovironment. It trades about -0.02 of its potential returns per unit of risk. Aerovironment is currently generating about -0.01 per unit of risk. If you would invest  4,771  in Aerojet Rocketdyne Holdings on July 2, 2022 and sell it today you would lose (772.00)  from holding Aerojet Rocketdyne Holdings or give up 16.18% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Aerojet Rocketdyne Holdings  vs.  Aerovironment

 Performance (%) 
       Timeline  
Aerojet Rocketdyne 
Aerojet Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aerojet Rocketdyne Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aerojet Rocketdyne is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aerojet Price Channel

Aerovironment 
Aerovironment Performance
0 of 100
Over the last 90 days Aerovironment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aerovironment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aerovironment Price Channel

Aerojet Rocketdyne and Aerovironment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aerojet Rocketdyne and Aerovironment

The main advantage of trading using opposite Aerojet Rocketdyne and Aerovironment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne position performs unexpectedly, Aerovironment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aerovironment will offset losses from the drop in Aerovironment's long position.
Aerojet Rocketdyne vs. Amazon Inc
The idea behind Aerojet Rocketdyne Holdings and Aerovironment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Aerovironment vs. Amazon Inc
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

Other Complementary Tools

Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go